What you should know about New York's free tuition scholarship

Phones started ringing in the admissions offices of New York colleges a few weeks ago.

The state had taken the unprecedented step of eliminating tuition for many students at its public city (CUNY) and state university systems (SUNY). Newly admitted students urgently dialed in to “get free tuition.”

Call after call, enrollment staff explained the basics:

The Excelsior Scholarship guarantees free tuition at CUNY and SUNY campuses to students from families currently earning less than $100,000 per year, with that cap climbing to $125,000 by 2019. Recipients will be required to earn 30 credits per year, maintain a 2.0 minimum grade point average, and live in New York after they graduate for as many years as they received the Excelsior benefit. Those who fail to fulfill these requirements will have their scholarship value converted to a loan.

This day was the first of many filled with hope, questions, and some concerns.

Many are worried that the amount of allocated funding is insufficient to meet student demand. This shortfall will likely result in a scholarship lottery late in the enrollment cycle and foster a confusing scramble for college placement—perhaps the inevitable outcome of the program’s late implementation.

Officials at public universities have already begun thinking about how to maximize staff and course capacities, while leaders of private schools have started to scrutinize their financial aid packaging and costs. And across New York’s colleges and universities, enrollment leaders are wondering how the free tuition program will impact their revenue, recruitment practices, and most importantly, the students the scholarship aims to support.

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Small, private schools face revenue risk

Because The Excelsior Scholarship benefits families earning up to twice New York’s median household income, many middle-class students will enjoy a larger range of college choices. Small, private schools that typically compete with CUNY and SUNY institutions for this pool of students now must also contend with free CUNY and SUNY schools.

This new challenge raises questions about what is at stake for private institutions.

To assess the impact of the new program, our Financial Aid Optimization experts scoured data from small, private partner institutions in New York—and their findings are cause for concern. Forty-percent of enrollment and 37% of tuition revenue from Excelsior Scholarship-eligible students is at risk.

Lower-cost private institutions are in a better position to compete with free tuition because Pell Grant-eligible students currently receive financial aid awards that can approach full tuition. However, the availability of aid is often misunderstood from the families that can benefit the most.

Among small, private schools outside of the state with sizable numbers of New York resident students, 3% of enrollments and 2% of tuition revenue is now jeopardized by the Excelsior Scholarship. However, for some schools the risk is much more drastic: For one institution, as much as 13% of enrollment and revenue is at risk.

It’s likely that the lessened risk to out-of-state private schools stems from the affluence of the New York population these schools typically matriculate. Wealthier students, who are not eligible for the state’s free tuition, have chosen to attend out-of-state private schools despite the ongoing recruitment efforts of in-state institutions. The Excelsior Scholarship will likely have little impact on this pool of college-bound students.

Potential impact to student cost and access

The introduction of the Excelsior Scholarship will no doubt revitalize conversations about affordability and the value of higher education. After all, cost remains the leading reason why students forego their first-choice schools.

Of course, the cost of attending college is more than just tuition. Critics of the Excelsior Scholarship are quick to note that it does not cover the often sizable—and sometimes hidden—expenses of room and board, fees, course materials, and similar expenses. These costs can be prohibitive to low-income students who might still struggle to pay them.

Likewise, the scholarship’s preference for full-time enrollment could become an additional obstacle for low-income students. Many students who work could struggle to complete 30 credit hours per year. Employed students, for which full-time classes are a “second shift”, may have reduced persistence rates.

There is also concern that less academically competitive students might find it even more difficult to enroll to a SUNY or CUNY school. Because more students will now be able to afford a SUNY or CUNY institution, application rates will rise—as will selectivity. When the bar for admission climbs, students with lesser credentials can fall short—and low-income students are particularly vulnerable.

How to prepare for prospective student uncertainty—and 4 steps for successful negotiation

But private colleges simply can’t and shouldn’t compete on price. These institutions must instead take steps to:

Clear up confusion regarding the actual cost of attendance by explaining fees and living expenses, and perhaps making greater use of net price calculators.

Make compelling affordability arguments by guiding students through financial aid offers and other income opportunities like work-study programs.

Compete on the high return on education (ROE) of the institution, detailing graduation rates and the successes of alumni.

Prepare for post-implementation recruitment of students who are declined Excelsior benefits after funding limits are reached. Schools should proactively communicate their costs, resources, and ROE throughout the summer.

These steps are exemplified in our partner Adelphi University’s well-crafted web page about the Excelsior Scholarship. Adelphi’s agile, positive stance demonstrates that although dramatic changes in a cost competition can complicate “normal” enrollment practices, institutions can still articulate their value, optimize their financial aid, and attract their best-fit students.

Optimize your financial aid for students turned away from the Excelsior Scholarship

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